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Procurement

Procurement Perspectives: Municipalities need precise procurement goals

I have mentioned several times in past columns that one of the most important aspects of any purchasing bylaw is to identify the responsibilities of each municipal officer. Municipalities need to look at which officers are likely to be involved in the procurement process, and to set down a scheme of checks and balances to make sure that none of them exercises inordinate influence over the process.

Unfortunately, usually this scheme of checks and balances is negated by the top-down management structure employed by the municipality, with the result that the apparent power of the “purchasing manager” is under the practical control of various directors, assistant commissioners, commissioners and so forth.

When individual councillors involve themselves in procurement decisions — which in too many cases is anything but an unusual occurrence — there is a further subversion of the apparent scheme of control.

However, even if commitments to openness, transparency and fairness were scrupulously observed, there is good reason to believe that the public procurement system will still perform below the level of public expectations. The problem is that a fair system, conducted openly, leading to contracting decisions that are transparent does not in itself result in a procurement process that furthers the goals that governments are seeking to pursue.

In contrast, a strategic approach to procurement requires the municipality to give its staff precise direction as to the overall goals that are to be pursued through the procurement process. A clear strategic direction often makes it possible to determine which of two possible approaches should be used in particular circumstances, and when councillors (either individually or collectively) are stepping over the line of giving acceptable direction, to give but a few examples, strategic considerations include the following:

  • Setting priorities for competing objectives — municipal finances are under increasing strain. Very often, the various overall objectives of a municipality will be found to compete for the same funding. How should the balance be struck in such a case?
  • Aligning present day procurement with long-term policy goals — building and equipment maintenance can be used to illustrate this particular concern. For decades, municipalities (and other levels of government) across the country have underspent on such aspects of municipal administration as the maintenance of public buildings and road and transportation infrastructure. The result is that many buildings and roads are now wearing out. They have reached the point where it would be cheaper to tear them down and build again, than to rehabilitate them. Municipalities need to move away from excessive pre-occupation on the short-term. Too often in the past, municipalities have deferred current maintenance (a specific type of procurement), with a probable substantial increase in likely expenditure on future capital procurement.
  • Deciding whether the emphasis of the municipality with respect to the provision of particular service or the delivery of programs should be focused on controlling standards and price, or on providing a basis for actual delivery of those services and programs by the municipality. For instance, should capital recreational facilities be publicly or privately owned and managed? If private, what public uses should be paramount?

Some types of programs, facilities or services can generate substantial revenue, as through advertising. Should those revenues be directed specifically at providing programs, facilities or services or incorporated into general municipal revenue.

As the forgoing list makes clear, the imposition of budgetary control does not give strategic directions. Budgets, of course, may reflect strategic imperatives and the limitations of available resources. Unfortunately, budgets alone do not set targets for growth and development, nor determine priority between such matters as infrastructure capital expenditure as opposed to maintenance and repair, or even as between capital investment and service/program delivery.

In Ontario, former section 271 of the Municipal Act, 2001 would propose a more strategic approach to materials management.

 

Stephen Bauld is a government procurement expert and can be reached at [email protected].

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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